Although cigarettes were not popular in the United States until the mid 19th century, the federal government still attempted to implement a tax on tobacco products such as snuff early on in its history. In 1794, secretary of the treasury Alexander Hamilton introduced the first ever federal excise tax on tobacco products. Hamilton s original proposal passed after major modifications, only to be repealed shortly thereafter with an insignificant effect on the federal budget. 1 Even though Hamilton s tax on tobacco failed, tobacco taxation continued to play an important role in American history.

On July 1, 1862, the United States Congress passed excise taxes on many items including tobacco. This occurred as a result of the Union s increasing debt during the American Civil War and the Federal government s need for additional revenue. After the war, many of these excise taxes were repealed but the tax on tobacco remained. In fact, by 1868 the Government s main source of income came from these lingering tobacco taxes. 2

Despite the excise tax of the Federal government, states did not ratify a tobacco excise tax until well into the 20th century. In 1921, Iowa became the first state to pass a tobacco excise tax at the state level in addition to the federal tax. 3 Other states quickly followed suit, and by 1950, 40 states and Washington D.C. enacted taxes on cigarette sales. 4

As of 1969, all U.S. states, the District of Columbia and the territories have cigarette taxes. In addition, several cities such as Chicago and New York City have implemented their own citywide cigarette tax. New York City has a citywide tax of $1.50, making the combined state and local rate $5.85, the highest in the nation. 5 The lowest rate in the nation is in Missouri, at 17 cents, where the state’s electorate voted in 2002, 2006, and 2012 to keep it that way. 6 7

Under the Obama Administration edit

On February 4, 2009, the Children’s Health Insurance Program Reauthorization Act of 2009 was signed into law, which raised the federal tax rate for cigarettes on April 1, 2009 from $0.39 per pack to $1.01 per pack. 8 9 The purpose of the State Children s Health Insurance Program (SCHIP) is to provide aid for impoverished children. SCHIP expanded its coverage of liability (in 2009)to include families with up to three times the federal poverty level as well as children from high income families in New York and New Jersey. SCHIP is proposed to also cover dental benefits and treatment of mental illnesses where it previously did not exist. In addition to providing these services for U.S. citizens, SCHIP is also expanded to cover immigrant children and immigrant pregnant women. 10

President Barack Obama has received both criticism and support for signing it.

One of the biggest critiques of the passing of this bill comes from economists who believe that an increase in the federal cigarette tax will lead to decreased funding for state programs that rely on their own state cigarette taxes. 11 According to Nobel prize winning economist Gary Becker, who has studied the long run price elasticity of cigarettes, the tax increase as a result of the Children s Health Insurance Program Reauthorization Act increases the price of cigarettes 13.3% which ultimately means a 10.6% decrease in unit sales. The National Tax Foundation calculates these numbers to determine a predicted $1 billion loss for states. Another argument against this bill claims it to be regressive, holding that the tax increase unfairly targets the poor because according to the Centers for Disease Control and Prevention (CDC) more than half of all smokers are low income. 12 The CDC also notes that, “However, because low income groups are more responsive to price increases, increasing the real price of cigarettes can reduce cigarette consumption among low income smokers by a greater percentage than among higher income smokers, and thereby diminish socioeconomic smoking disparities. 13 Further, lower income communities also suffer from tobacco related illnesses at a disproportionately higher rater than their higher income counterparts. 14

In a study conducted on behalf of the New York State Department of Health, it revealed that low income smokers (those in households making under $30,000), spent an average of 23.6% of their annual household income on cigarettes, compared to 2.2% for smokers in households making over $60,000. 15

Effects on smoking rates edit

One of the reasons for the support of increased cigarette taxes among public health officials is that many studies show that this leads to a decrease in smoking rates. 16 The relationship between smoking rates and cigarette taxes follows the property of elasticity the greater the amount of the tax increase, the fewer cigarettes that are bought and consumed. 17 This is especially prevalent amongst teenagers. For every ten percent increase in the price of a pack of cigarettes, youth smoking rates overall drop about seven percent. 18 This rate is also true amongst minorities and low income population smokers. 19 The rates of calls to quitting hot lines are directly related to cigarette tax hikes. When Wisconsin raised its state cigarette tax to $1.00 per pack, the hot line received a record of 20,000 calls in a two month time period versus its typical 9,000 calls annually. 20

An analysis of smoking and cigarette tax rates in 1955 through 1964, prior to the Surgeon General s first report and general antismoking sentiment, shows the same relationship between tax increases and declining smoking rates that are prevalent today, suggesting that popular attitudes towards smoking are not a confounding factor. 17

In 2012, RTI International conducted an analysis of data from the 2010 2011 New York and national Adult Tobacco Surveys to assess the financial burden cigarette taxes place on low income families for the New York State Department of Health. According to ABC News, the study found that “higher cigarette taxes may be financially hurting low income smokers rather than making them more likely to quit.” Among the 13,000 surveyed in New York State, lower income smokers spent 23.6 percent of their income on cigarettes, compared to two percent by higher income New York residents and an average of 14 percent among lower income smokers nationally. 21 22

Proportion of taxes in cigarette prices edit

While the price of cigarettes has continuously increased since 1965, the percentage of that price going towards taxes is now half of what it was then. 19 While tobacco companies complain about the $1.01 cigarette tax, Phillip Morris, Reynolds American, and Lorillard have all increased their prices by almost $1.00 per pack on their own. 23 Phillip Morris currently lists all taxes, including federal, state, local, and sales taxes, as 56.6% of the total cost of a pack of cigarettes. 24

State cigarette tax rates edit

The following table lists American state and territory tax rates (as of August 1, 2013) 23 25

Do e-cigarettes help smokers quit? it depends on whom you ask – businessweek

Electronic cigarettes ‘could damage your lungs’ as they cause less oxygen to be absorbed by the blood

E cigarettes are in the middle of an image war. The $1.5 billion e cig industry says the nicotine vaporizers are a less harmful alternative to smoking tobacco. Public health officials, on the other hand, warn that vaping may be an on ramp for kids to start smoking tobacco, and seeks more restrictive rules. The science is inconclusive, and for now the Food and Drug Administration has landed somewhere in the middle It recently proposed rules to bar sales to minors, but stopped short of cracking down on advertising or flavored e cigs that critics say appeal to children.

Doctors who specialize in helping people quit smoking say confusion about vaping s benefits for smokers who want to stop makes their job harder. We don t have any real evidence that they help people stop smoking, says Dr. Richard Hurt, who ran the Nicotine Dependence Center at the Mayo Clinic in Rochester, Minn., for 26 years. While he says there s no question that puffing an e cig is less harmful than smoking tobacco, they re not safer than just breathing clean air.

Most current smokers want to quit and have tried at least once. About 85 percent of e cig users said one of the reasons they vaped was to help them quit smoking, according to a four country survey (PDF) published in the American Journal of Preventive Medicine. But quitting did not differ between users and nonusers, the paper noted.

The lack of evidence hasn t stopped some e cig makers from promoting their products as smoking cessation aides. Vapor Shark last year published a blog post lamenting that the FDA won t allow e cig manufacturers to educate smokers on the efficacy of these products for smoking reduction and cessation. The FDA rules apparently didn t stop Vapor Shark from making an expansive claim in the blog post s title Let s Just Call it Like it Is Electronic Cigarettes Are Useful as Smoking Cessation Tools.

As evidence, Vapor Shark cited a study using a focus group of 11 people. There s a dearth of rigorous evidence on e cigs role in smoking cessation. Hurt says no one has done a large scale, randomized, double blind trial comparing e cigs containing nicotine with placebo e cigs to see if those with nicotine make any difference for people trying to quit. That kind of science is the gold standard in medical research, and it s what the FDA wants to see before allowing new therapies on the market. Until that s done, we re never going to recommend that they be used, Hurt says.

Research has been conducted on medically approved smoking cessation aides such as nicotine patches, gums, and lozenges, which make up a $4.5 billion global market, according to GBI Research. Pharmaceutical companies that have sold those products widely since the 1990s want to avoid muddying the line between vaping and established therapies.

Gums and patches deliver controlled doses of nicotine to ease withdrawal symptoms, says Dr. Beloo Mirakhur, U.S. medical director of GlaxoSmithKline (GSK) Consumer Healthcare, which sells Nicorette and Nicoderm CQ. An e cigarette, by contrast, gives smokers nicotine in uncontrolled fashion, Mirakhur says. Vaping also reinforces the hand to mouth behavior, which may make it harder for smokers to kick the habit, she says.

The Centers for Disease Control says that most smokers who try to quit don t use evidence based treatments, and just because there s no proof that e cigs effectively help people quit doesn t mean that individual smokers won t feel they help. The same can be said for hypnosis, acupuncture, laser therapy, or any number of ideas.

At the same time, regulators and public health officials need to rely on evidence when they craft public policy, and smoking remains a pressing public health problem. Cigarettes are blamed for the deaths of nearly 500,000 Americans each year, according to the CDC a death toll equivalent to four Boeing 777s crashing every day with no survivors. At the moment, there s no evidence that e cigs help avert that daily disaster, the Mayo Clinic s Hurt says, and the buzz about them distracts us from the things we know that do work.